1936 (5) TMI 34 - Other - Income Tax

Summary

Issues:
1. Assessment of income tax based on a forest contract.
2. Dispute regarding additional grounds of appeal.
3. Refusal to admit additional grounds of appeal by the Assistant Commissioner.
4. Correctness of the form of the question under reference.

Assessment of Income Tax Based on a Forest Contract:
The case involved an assessee firm with a partner who obtained a forest contract for cutting trees. The firm was assessed at a flat rate of 40% of the contract amount for two years. Subsequently, the partner was assessed separately for his share of the profits from the contract. The firm objected to the assessment for the year 1934-35, arguing that the income had already been assessed for the previous years. The Assistant Commissioner reduced the assessment, but the assessee was dissatisfied and appealed further.

Dispute Regarding Additional Grounds of Appeal:
During the appeal process, the assessee filed an application urging additional grounds challenging the assessment. The main ground was that the assessment for 1934-35 could not be solely based on the income of the previous year. The Assistant Commissioner declined to admit these additional grounds, citing that they were filed after the prescribed period for appeal had expired.

Refusal to Admit Additional Grounds of Appeal by the Assistant Commissioner:
The Assistant Commissioner exercised discretion in refusing to entertain the additional grounds of appeal mainly due to the belief that the application was subject to the 30-day limitation rule for filing appeals. However, the court found this view incorrect, stating that additional grounds could be filed at any time before the appeal decision. The objection raised in the additional grounds questioned the assessment principle, which the court deemed important for fair assessment practices.

Correctness of the Form of the Question Under Reference:
An objection was raised regarding the form in which the question under reference was worded by the Commissioner. The court upheld the objection, stating that the question should have been framed as per the rules of procedure for cases under Section 66 of the Income Tax Act. The court substituted the question with the form stated by the assessee.

In conclusion, the court found that the Assistant Commissioner erred in refusing to admit the additional grounds of appeal. The court emphasized the importance of fair assessment practices and ruled in favor of the assessee, directing the Assistant Commissioner to consider the additional grounds raised. The court also addressed procedural issues regarding the form of the question under reference, ensuring compliance with the rules of the Chief Court.